Malaysian palm oil futures slid on Monday evening, charting a third consecutive day of losses as sentiment turned bearish over expectations of rising production and end-stock levels. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed 0.8 percent down at 2,783 ringgit ($657.92) a tonne, having touched a low of 2,780 ringgit, its weakest since Oct. 25.
Traded volumes stood at 33,960 lots of 25 tonnes each on Monday evening. Malaysian palm oil output is seen rising to a two-year peak in October, lifting inventories to their highest since January 2016, boosted by holiday season demand and a higher number of working days, according to a Reuters poll. "Production and end-stocks are seen rising, followed by weak externals seen in both Dalian and soyaoil," on Kuala Lumpur futures trader said, referring to weakness in soyaoil on the Chicago Board of Trade (CBOT) and China's Dalian Commodity Exchange.
"The only concern is the weather, which may turn this bear around," he said of year-end monsoon rains that could cause some short-term disruption to harvesting. October production in Malaysia is seen rising by 9.4 percent from September to 1.95 million tonnes, while end-stocks are pegged at 2.2 million tonnes, up 9.6 percent month on month, the Reuters poll showed.
October exports are likely to have risen 2.3 percent to 1.55 million tonnes. In related edible oils, the CBOT December soyabean oil contract was down 0.1 percent, while the January soyabean oil contract on the Dalian Commodity Exchange slipped by 0.03 percent. The Dalian January palm olein contract was down 0.4 percent.
Prices of palm oil are affected by movement in related oils that compete for a share in the global vegetable oils market. Palm oil could drop to 2,779 ringgit a tonne, as it has broken a support at 2,808 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.